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Service Providers Focusing on OTT in African Telecommunications Market

TMCnews Featured Article

July 18, 2014

Service Providers Focusing on OTT in African Telecommunications Market

By TMCnet Staff

The developing African telecommunications market is steadily growing, and is about to become a one billion person market worth nearly $20 billion. As such, there are several teleco operators that are fighting a turf war over who will provide service to these customers, with mobile carriers squaring off against Over the Top (OTT) providers of similar services. It appears however that the existing service providers still have an edge over OTT providers in both speed of service and customer loyalty, but the carriers will have to act quickly to provide the same benefits OTT providers offer before they become carriers themselves.

According to IDT Global's Jonah Fink, “The goal for service providers is that they basically need to become OTT operators faster than the OTT providers can become carriers... but they can do it.” This conflict arises from the fact that OTT operators can generally offer cheaper services that leech off of the other carriers' networks, but the service is generally less reliable.

Fink goes on to say that “the fact is that onsumers don't like OTT operators very much – they would stay loyal to the African Teleco brands if they could get the same services.” Two of the biggest threats to African mobile carriers are WhatsApp and Viber, which offer much cheaper text-messaging and calling services but require a third-party Internet connection to work. However, if the companies continue to make more money by converting telecom customers, they will eventually be able to build their own networks or even buy the infrastructure off from the other service providers.

Until then, African mobile network operators will have to reduce prices and increase reliability before OTT markets have a chance to get off the ground. According to Fink, “$20 billion will not just fall into the laps of African operators – they'll have to make sure they fight for it. They also predict that OTT operators could cost carriers $63 billion per year if they don't react fast enough and in the correct way.”